Who is a director of a company?
A director is a person appointed to the board of a company. The board directs the company. The shareholders appoint the directors, except where the Act lets the board or the articles do it.
What does the Act call a director?
Section 2(34) says a director is a director appointed to the board. The title on a visiting card does not create the office. The appointment is filed, and the person must already hold a director identification number. How the appointment is made is on the appointment page.
How many directors are required?
| Company | At least | Without a special resolution |
|---|---|---|
| One person company | 1 | 15 |
| Private company | 2 | 15 |
| Public company | 3 | 15 |
At least one director must be a person who stayed in India for 182 days in the financial year. One person may not be a director of more than 20 companies at the same time, and not more than 10 of those may be public companies. The board meets as the board meetings page describes.
Who can be appointed?
The person must be able to contract, so a minor cannot be appointed. Citizenship is not a bar. The person must hold a director identification number and must not be disqualified under section 164. The grounds, including a company that has missed its financial statements or annual returns for three continuous financial years, are on the disqualification page.
What must a director do?
Section 166 requires a director to act in accordance with the articles, in good faith to promote the objects of the company for the benefit of its members as a whole and in the best interests of the company, its employees, the shareholders, the community, and the protection of the environment. A director must exercise due and reasonable care, and must not be involved in a situation of a conflict with an undue personal interest. The wider idea of how the board is accountable is on the corporate governance page. Pay is a separate limit, on the remuneration page.
Frequently asked questions
Four questions cover who appoints, the ceiling of 15, the cap of 20, and citizenship.
Are directors only elected at a general meeting?
The usual appointment is by the shareholders. The Act also lets the board appoint the first directors named in the articles, an additional director, and a director to fill a casual vacancy, in the cases it sets out.
Can a company have more than 15 directors?
Yes, if the shareholders pass a special resolution. Fifteen is the number a company may have without that resolution.
Can one person be a director of 25 companies?
No. Section 165 caps the number at 20 companies, of which not more than 10 may be public companies. A dormant company is left out of the count in the way that section provides.
Must every director be an Indian citizen?
No. A foreign national can be a director. At least one director of the company must be a resident who stayed in India for 182 days in the financial year.
Sources
Director is section 2(34). The minimum numbers are section 149. The cap on how many companies one person may direct is section 165. Duties are section 166.